Cities Court Craft Breweries

The number of U.S. breweries is at a 125 year high with 350 new breweries opening in the past year, according to stats released on Monday by the Brewers Association. Beer drinkers aren’t the only ones enjoying this growth; craft breweries have caught the eyes of local officials and economic developers and they are encouraging the development, growth, and attraction of these companies.

Over the past few years a number of cities launched attraction campaigns to land the east-coast expansions of some of the largest western craft brewers. Roanoke’s bid to lure Chico, CA based Sierra Nevada included calls from senior political figures, $13 million in incentives, and vials of local water. Philadelphia marketed the city’s thriving craft beer scene in their campaign for Fort Collins, CO based New Belgium Brewery (maker of the popular Fat Tire Amber Ale) while dangling millions in tax incentives.

Both companies, along with Lyons, CO based Oskar Blues, chose brewing hotspot Asheville, NC (and its surrounding region) as their second home, adding to the city’s growing “craft beer cluster.”

Why all the attention to breweries? Well, aside from the fact that beer is delicious, craft breweries are extremely desirable from an economic development standpoint. They contribute to “place making,” are growth-oriented exporters, and attract tourists.

Craft breweries help define a sense of place and local identity.

Place making, one of the more nebulous urban policy areas, refers to the desire to create unique and distinct locations where people want to live, visit, experience, and spend money. Local businesses play an important role in place making because they provide unique flavor and experiences that differentiates a city from the sea of endless chain experiences. Within this context, local breweries emerge as ideal place markers, as they are an industry known for making unique products.

Reinforcing this connection to place, the name of a brewery or its beers will often give a nod to their region, city, or lore. For example, the four D.C. breweries that have come online in the past couple of years (D.C. Brau Brewing Company, Chocolate City Beer, Port City Brewing, and Three Stars Brewing Company) have subtle or not so subtle acknowledgements to their region.

If a brewery’s name doesn’t have a direct tie to its location, beers commonly have the city of origin on the label, as proudly celebrated by Comstock, MI Township Supervisor Tim Hudson. Comstock is home to the expansion of Kalamazoo headquartered Bell’s Brewery and will have its name on newly minted bottles of Bell’s popular Oberon beer.

Lastly, people like supporting locally produced products …and what better product than beer?

Craft breweries are the right type of small business – exporters with growth potential.

As mentioned previously, craft breweries are a growth industry. Even in this dismal economy, the Brewers Association notes that craft breweries (definition here) had 15 % dollar value growth last year and reported 14 % growth for the first half of 2012. Yet, craft breweries produce only 5.9 % of the beer by volume in the U.S., signaling that there is still plenty of room for the craft industry to grow.

As they grow, breweries have export potential as their distribution extends outside the immediate municipal borders. This accomplishes a central goal of economic development, bringing new dollars into the community verses just circulating and replacing local spending.Craft breweries attract visitors.

U.S. beer tourism is becoming increasingly more popular. As detailed in The New York Times, cities like Bend, OR are seeing tourists travel to their community just for the beer. Tiny Potosi, WI (pop. 711) has also had success with the reopening of a historic and abandoned brewery. The town recorded 60,000 visitors in the year following the opening of the Potosi Brewing Co.

On the other hand, a loss of a brewery can mean a loss of visitors. Evolution Craft Brewery Co. needed more space to accommodate the company’s growth and left its original location in Delmar, DE for a larger space in near-by Salisbury, MD (with the help of a Maryland Economic Development Assistance Fund). Lamenting the loss, Delmar Mayor Michael Houlihan reported that Evolution helped draw visitors who normally would not have visited to the area.

A sober caveat.

With the attention and growth of the craft beer industry, there has also been discussion of an eventual bursting of a “beer bubble.” To be fair, it’s likely that increased popularity and lots of new breweries entering the market will also lead to increased exits as competition increases. At the same time, given the small percentage that craft beer occupies in the overall beer market and the continued mainstream acceptance of craft beer, the industry’s future looks promising.

It’s safe to say that for the foreseeable future cities will continue to welcome breweries and their hop-loving fans with open arms.

4 comments on “Cities Court Craft Breweries”

Katie thanks for post such an interesting, well researched and thoughtful article.

I found missing any mention of Three-Tier distribution regulations, which negatively impact the growth of these small, craft breweries. “Beer Wars,” an excellent documentary on the struggles of producers to get their product to market, is promoted by IMBd as, “A contemporary David and Goliath story that takes you inside the cutthroat world of the big business of American beer.”

In view of the strangle hold the likes of Anheuser-Busch InBev has on the market, city planners/economic developers should cautiously approach “place making” projects with a small craft brewery as its focus or a major player. My guess is that many of the craft breweries that failed in 2011 did so as a consequence of not being able to move their products to the shelves of regional or national retailers. With AB InBev controlling an ever increasing majority of wholesale distributors and lobbying Congress so aggressively to maintain the Three-Tier System status quo, the tag line, “Craft breweries are the right type of small business – exporters with growth potential,” may be true for a small few, but, unfortunately, will not be the case for so many until the government gets out of the way and stops over regulating the “free market” system.

On that note, I’m off to the store for a six pack of Dogfish Head’s 60 Minute IPA. Cheers!

Thanks for making the link between craft brewing and local development goals. You are spot on when you say that craft breweries are exactly the “right type” of small business to attract. They export their products and attract visitors.
In regards to the question around a “beer bubble” – the big two beer producers (Budweiser and Miller/Coors) still account for a vast majority of beer consumption in the US. Is it feasible that craft brewers could eventually saturate the market to a point where they counterbalance the current duopoly?
Thanks for posting an informative piece on this topic of growing importance.